Jason Kotenko


When Will the Patent Hell Stop?

Sun, Jul 17 2011

Patents have been on my mind lately. It seems like everywhere you turn, there is a new company whose sole purpose is to buy up patents and use them to litigate against people who are actually innovating in the marketplace.

Even developers in Europe are starting to pull their apps from the US markets because of the threat of lawsuits from companies like Lodsys and Macrosolve.

At what point is the US Legislature going to recognize that software patents have become a serious impediment to innovation in the marketplace? At this point in time, if you are an independent producer of software, whether that be mobile apps, desktop software, or even web applications, you are in imminent danger of being extorted by patent trolls.

Why? Because it seems that the US Patent Office has absolutely zero expertise in evaluating technical patents, firstly. Patents are granted for things like "electronic forms distributed via the Internet or to mobile devices", in the year 2002. This is literally a dozen years or more after the the Internet and similar services were popularized, and all through that time forms were being distributed via the Internet to mobile devices like laptops. The prior art here is ridiculously obvious, and yet this company was granted the patent. This happens on a non-stop basis at the Patent Office, so you've got hundreds or thousands of patents which are laughably invalid.

The second factor making this a death knell for any small or even medium sized company is the cost of patent litigation. Just to defend yourself from a claim of patent infringement, you are looking at well over $2.5 million in costs. This is just to defend yourself. How many app developers do you know who have that kind of cash? I'd guess that it is something on the order of 1/10 of 1%.

These two factors together make for a highly combustible situation. Today, we're looking at companies which are funded from large institutional investors (more here), who are looking at this whole "business" as just one more investment in their portfolios. These "patent troll" companies only have to do one thing: accuse hundreds of app developers of patent infringement. In the process, they can collect a royalty from the resigned ones, put the scared ones out of business, and litigate the principled ones into bankruptcy. I hate to bring it up, but it looks like once again, Wall Street is out to rape the people in this country who actually create value.

How do we solve this? That's a tough question. One thing is to make patent litigation easier and less expensive. This is counter intuitive, but if the process were not a multi-million dollar game, it would put much smaller shops into the running for overturning bogus patents in court. A second suggestion is to have a pre-trial phase of patent litigation where the defendant is allowed to present evidence to a specially assigned US Patent Office examiner that the patent is invalid. This would be a streamlined and easy to use process, which would allow only patents which pass a higher level of scrutiny to even make it to trial. Something like this probably currently exists, but as it stands, it is prohibitively expensive. Perhaps fees should be left only for the eventual loser of the case.

The best option, in my opinion, and many others, is to abolish patents on business processes and software entirely. With a federal government bought and paid for by the highest bidder, however, good luck with that one.

Copyright 2011 Jason Kotenko. All Rights Reserved. Contact me